It’s been approximately a decade since the Great Recession began. By year-end 2008, the U.S. Federal Reserve (the Fed) had lowered the target federal funds rate to near-zero and embarked on an aggressive quantitative easing campaign, hoping to resuscitate the economy with a big booster shot of lending, borrowing and spending dollars.

Perhaps the economic recovery that followed was a direct result of these and other Fed initiatives. More likely, there were a number of contributing factors. Either way, the Fed has begun to reverse course, restoring its policies and targets closer to historical “norms” through quantitative tightening and gradually rising rates.

As an investor, what can or should you do to prepare if rates do continue to rise? For that matter, what can or should you do if they don’t? As usual, our advice may not be as action-packed as you might crave, but there are a number of solid, evidence-based strategies to guide the way.

After the Tax Cuts and Jobs Act (TCJA) was passed, there was concern that the beloved mortgage interest deduction for home equity loans had met its demise. While, on its face, that is what the law says, there is a loophole that taxpayers can use if they meet certain criteria.

As long as the loan is secured by a qualified residence (primary home or vacation home) and not for an investment property then you can begin evaluating whether the loan qualifies for the technique we are discussing that was approved by the IRS on February 21, 2018.

• The proceeds from the loan must be used for home improvements. • The loan must be characterized as an acquisition debt. The law states that the debt was incurred to “buy, build or substantially improve” a qualified residence.

So many financial behavioral biases, so little time! Today, let’s take a few minutes to cover our next batch of biases: overconfidence, pattern recognition, and recency.

OVERCONFIDENCE

What is it? No sooner do we recover from one debilitating bias, our brain can whipsaw us in an equal but opposite direction. For example, we’ve already seen how fear on the one hand and greed on the other can knock investors off course either way. Similarly, overconfidence is the flip side of loss aversion. Once we’ve got something, we don’t want to lose it and will overvalue it compared to its going rate. But when we are pursuing fame or fortune, or even going about our daily lives, we tend to be overconfident about our odds of success.

There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter in the alphabet. Today, we’ll continue with the most significant ones by looking at: hindsight, loss aversion, mental accounting and outcome bias.

HINDSIGHT

What is it? In “Thinking, Fast and Slow,” Nobel laureate Daniel Kahneman credits Baruch Fischhoff for demonstrating hindsight bias – the “I knew it all along” effect – when he was still a student. Kahneman describes hindsight bias as a “robust cognitive illusion” that causes us to believe our memory is correct when it is not. For example, say you expected a candidate to lose, but she ended up winning. When asked afterward how strongly you predicted the actual outcome, you’re likely to recall giving it higher odds than you originally did. This seems like something straight out of a science fiction novel, but it really does happen!

Let’s continue our alphabetic tour of common behavioral biases that distract otherwise rational investors from making best choices about their wealth. Today, we’ll tackle: fear, framing, greed, and herd mentality.

FEAR

What is it? You know what fear is, but it may be less obvious how it works. As Jason Zweig describes in “Your Money & Your Brain,” if your brain perceives a threat, it spews chemicals like corticosterone that “flood your body with fear signals before you are consciously aware of being afraid.” Some suggest this isn’t really “fear,” since you don’t have time to think before you act. Call it what you will, this bias can heavily influence your next moves – for better or worse.

When is it helpful? Of course, there are times you probably should be afraid, with no time for studious reflection about a life-saving act. If you are reading this today, it strongly suggests you and your ancestors have made good use of these sorts of survival instincts many times over.

Publishers Clearinghouse has long been famous for its big checks and big winnings, but it has recently come to our attention that scammers have been using the PCH name and logo to commit fraud.

Although PCH's sweepstakes are legitimate, you still need to be very cautious if you receive a prize notification from PCH or any other company claiming you are a big winner. We are advising all of our clients to shred and ignore notifications from PCH and to be wary of all prize notifications, especially ones that ask for money.

Welcome back to our "ABCs of Behavioral Biases." This article introduces you to four self-inflicted biases that knock a number of investors off-course: anchoring, blind spot, confirmation and familiarity bias.

ANCHORING BIAS

What is it? Anchoring bias occurs when you fix on or "anchor" your decisions to a reference point, or default when required to estimate an unknown value.

When is it helpful? An anchor point can be helpful when it is relevant and contributes to good decision-making. For example, if you've set a 10 pm curfew for your son or daughter and it's now 9:55 pm, your offspring would be wise to panic a bit, and step up the homeward pace.

One of our responsibilities as an investment advisor is to help you put market news in its proper perspective. If you're reading or listening to the popular press these past few days, you are probably seeing or hearing storm and fury having to do with government shutdowns, market corrections and the possibility that the Fed may raise interest rates. As the popular media scrambles to explain the unexplainable - current market volatility and how long it's going to last - we thought we'd share a headline of our own:

"The stock market is a giant distraction to the business of investing."

Said by Vanguard founder John Bogle in his 2007 classic, "The Little Book of Common Sense Investing."

Robin Young of Northstar Financial Planning on getting to the heart of what is most important to people

This article was written by Lois Shea of the New Hampshire Charitable Foundation and originally featured on nhcf.org.

Research shows that people want their professional advisors to ask them about charitable giving. And sooner rather than later. The “U.S. Trust Study of the Philanthropic Conversation,” conducted in partnership with The Philanthropic Initiative, showed that virtually all high-net-worth people think this discussion should happen within the first several meetings with an advisor. A third think the topic of charitable giving should be raised in the very first meeting. Yet fewer than half feel their advisors are good at discussing personal or charitable goals with them.

Wondering how to start a conversation about charitable giving with your clients? Or looking to refresh it?

In the coming months, we will be sharing a series of articles about behavioral biases and the impact on investment and planning decisions. As financial advisors, it is our role not only to help our clients successfully plan for and invest in their future wealth, but also to act as a coach, helping clients to better understand wise investing strategies and the long-term, global approach that we take in our wealth management process. Our goal is to guide clients to make decisions that serve their best interest. We encourage you to provide us with feedback as each new article is released and we look forward to an active dialogue on the subjects. Enjoy!

The Tax Cuts and Jobs Act was just released by the House Ways and Means Committee and it contains a large number of provisions that would affect individual taxpayers.

Here are some of the key provisions:

Tax rates

Under the bill, individuals would be subject to four tax rates, instead of the current seven: 12%, 25%, 35%, and 39.6%, effective for tax years after 2017. The rates under the bill would be as follows: